4Q of 2014 Downtown and D.C. Hotel Market Update*

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Publish Date

02/19/2015

D.C. Set Hotel Revenue and Operating Performance Records in 2014

D.C. experienced a record hotel year in 2014 in both revenues and operating performance. D.C. hotel room revenue totaled $1.68 billion, a $69 million (or a 4%) increase over the previous record of $1.61 billion set in 2013. The Average Daily Rate in D.C. in 2014 was a record $210.35, a $1.23 per room increase (or a 0.6%) increase over the previous record of $209.12 set in 2013. The Occupancy Rate in 2014 was a record 76.9%, (or a 1%) increase over the previous record set in 2013. Thus, the Revenue Per Available Room (RevPAR) in 2014 was a record $161.74, a $2.53 (or a 1.6%) increase over the previous record of $159.21 set in 2013.

The increases in D.C. hotel operating performance occurred despite the opening of four new hotels in 2014, including the 1,175 room Marriott Marquis Convention Center Headquarters Hotel (which alone increased D.C. hotel rooms by approximately 4%). In fact, the opening of the Marriott Marquis did not impact the operating performance of Downtown hotels. The Marriott Marquis’ new rooms represented a 12.8% increase in the number of Downtown hotel rooms and there was a 12.9% increase in Downtown hotel revenues for the period from May 1, 2014 through December 31, 2014.

Downtown hotels continued to perform at a higher operating level than the Rest of D.C. hotels (those located outside of Downtown). Downtown hotels had both a higher average daily hotel room rate ($227 per night compared to $201 per night) and a higher hotel room occupancy rate (77.5% compared to 76.6%); resulting in a substantially higher Revenue Per Available Room night ($176 per hotel room compared to $154 per hotel room).

DowntownDC hotel revenue increased by $38 million, from $606 million to $644 million between 2013 and 2014. The Rest of D.C. hotel revenue increased by $31 million, from $1.007 billion to $1.038 billion between 2013 and 2014.

Both DowntownDC and the Rest of D.C. trailed 2013’s revenue performance for the four months between January through April 2014, but then outperformed 2013 during the period of May through December 2014.

Comparing 2013 and 2014 for the period from January to April, DowntownDC hotel revenue decreased by 5.9%, the Rest of D.C. hotel revenue decreased by 7%, which caused total D.C. hotel revenue to decrease by 6.6%.

Due to the January 2013 second inauguration of President Barack Obama and a record April 2013, the 2014 operating performance for January through April was substantially behind 2013. And, without new hotel rooms, this translated directly into lower room revenues compared to 2013.

Comparing 2013 and 2014 for the period from May to December, DowntownDC hotel revenue increased by 12.9%. The rest of D.C. hotel revenue increased by 8.4%, which resulted in total D.C. hotel revenue increasing by 10.1%.

Downtown hotels very slightly improved their operating performance compared to 2013. The rest of D.C. hotels substantially improved their operating performance, which resulted in record operating performance for all D.C. hotels. Thus, with an increase of 1,795 rooms, this translated directly into record revenues compared to 2013 for May through December, and record revenues for the full year 2014.

Downtown, Rest of D.C. and Total D.C. 2014 Hotel Operating Statistics

DowntownDC RevPAR

Down for January – April 2014 compared to January – April 2013

Up slightly for May – December 2014 compared to May – December 2013, despite the opening of the Marriott Marquis

Rest of D.C. RevPAR

Down for January – April 2014 compared to January – April 2013

Up substantially for May – December 2014 compared to May – December 2013

Total D.C. RevPAR

Down for January – April 2014 compared to January – April 2013

Up substantially for May – December 2014 compared to May – December 2013

Future D.C. Hotel Development

Eight hotels currently under construction in D.C. will bring 1,384 additional rooms to the market over the next two years. Several other hotels are planned to break ground in the next two years and will add 500 to 1,000 rooms to D.C.

D.C. hotels also recently received new recognition. The Jefferson was ranked No. 10 on U.S. NewsTravel’s 2015 50 Best Hotels in the USA , the Capella Washington was ranked 18, The Ritz-Carlton Georgetown ranked 29, the Four Seasons Hotel ranked 32, and The Hay-Adams ranked 46.

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*Hotel data provided by Smith Travel Research and organized by the Downtown BID.